2024 (7) TMI 1717 - AT - Income Tax

Penalty under s.271DA deleted where cash receipt for Rs.5 lakh accepted as safe custody, no s.269ST intent

ITAT CUTTACK - AT allowed the appeal and deleted the penalty levied under s. 271DA for contravention of s. 269ST, holding the assessee had a 'good and ... Penalty levied u/s. 271DA - violation of the provisions of Section 269ST - accepting cash more than permissible limit - HELD THAT:- It is seen that since inception of the proceedings the assessee has made a clear statement that the cash was received in exception circumstances where the buyer approaches the assessee to keep the said cash of Rs. 5 lakhs in her custody as they do not have the cheque book with them and since they (purchaser belonged to Berhampur) visited the place of the assessee at Cuttack, insisted for acceptance of cash for safe custody also. The assessee deposited the said cash in her bank account on the very next date which shows that there was no intention of the assessee to violate the provisions of the Act. From the perusal of the proviso to Section 271DA(1) of the Act, it prescribes that if the assessee satisfied that there was good and sufficient reason for contravention of the provisions of Section 269ST, no penalty is leviable. From the facts and the circumstances of the case, we find that the assessee has been able to demonstrate that she has sufficient and reasonable reason for accepting the cash of Rs. 5 lakhs. Vijapurapu Sudha Rao [2023 (12) TMI 211 - ITAT VISAKHAPATNAM] wherein the Tribunal under similar circumstances, deleted the penalty levied u/s. 271D. Assessee has good and sufficient reason for accepting cash which was not controverted by the lower authorities, therefore, the penalty levied u/s. 271DA of the Act is hereby deleted. Assessee appeal allowed. ISSUES PRESENTED AND CONSIDERED 1. Whether penalty under section 271DA is leviable for receipt of cash in contravention of section 269ST where the assessee received a specified sum in cash on one occasion during transfer of immovable property. 2. Whether the proviso to section 271DA (that no penalty shall be imposable if the person proves good and sufficient reasons for the contravention) is satisfied where the cash was accepted because the purchaser lacked a cheque book, the cash was deposited into the bank account the next day, and tax consequences were duly discharged. 3. Whether earlier Tribunal decisions on deletion of penalty under corresponding provisions (e.g., penalties under section 271D for contraventions of section 269SS) are applicable and/or persuasive in determining the present penalty under section 271DA. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Levy of penalty under section 271DA for receipt of cash in contravention of section 269ST Legal framework: Section 269ST prohibits receipt of specified sums (in relation to transfer of immovable property) otherwise than by account-payee cheque, bank draft or electronic clearing system, and section 271DA prescribes penalty equal to the amount so received, subject to the proviso that no penalty shall be imposed if the person proves good and sufficient reasons for the contravention. Precedent treatment: The Tribunal referred to a recent Tribunal decision addressing analogous facts under section 271D/section 269SS where penalty was deleted on similar grounds; that decision was treated as persuasive and followed in relevant respects. Interpretation and reasoning: The Tribunal examined the factual matrix: the cash receipt occurred on a single occasion because the buyer, visiting from outstation, purportedly had no cheque book and insisted on leaving cash for safe custody; the assessee requested cheque payment but accepted cash under these circumstances and deposited the amount in her bank account the next day. The Tribunal treated immediate deposit and absence of concealment or tax evasion as evidencing lack of mala fide intent. The proviso to section 271DA places the onus on the recipient to show 'good and sufficient reasons' for the contravention; the Tribunal found that the circumstances adduced constituted such reasons. Ratio vs. Obiter: Ratio - Where a recipient of cash in contravention of section 269ST demonstrates that (i) the cash was accepted under unavoidable or exceptional circumstances (e.g., buyer without cheque book, visiting from outstation), (ii) the recipient promptly deposited the cash into a bank account, and (iii) relevant tax liabilities on the transaction are discharged, the proviso to section 271DA is satisfied and penalty under section 271DA is not leviable. Observations applying analogous Tribunal authority (section 271D/269SS) were treated as directly relevant rather than mere obiter. Conclusion: Penalty under section 271DA was not sustainable and was deleted because the assessee proved good and sufficient reasons for accepting cash and promptly depositing it. Issue 2 - Application and scope of the proviso to section 271DA: what constitutes 'good and sufficient reasons' Legal framework: The statutory proviso to section 271DA exempts penalty where good and sufficient reasons for the contravention are proven by the recipient. The statutory scheme aims to penalize intentional receipt of large cash payments but preserves relief where contravention is justified by reasonable cause. Precedent treatment: The Tribunal relied on a prior decision where penalty under the corresponding provision was deleted on similar factual grounds; that decision articulated that immediate banking of cash receipt and payment of tax indicate genuineness and constitute reasonable cause. Interpretation and reasoning: The Tribunal construed 'good and sufficient reasons' to include factual situations where acceptance of cash was unavoidable and temporary (custodial acceptance for safe keeping), where the recipient made contemporaneous attempts to secure payment by cheque, and where the recipient promptly banked the funds and complied with taxation obligations. The Tribunal emphasized the absence of any contradictory finding by lower authorities that the receipt was part of a scheme to evade tax or to suppress receipts. Ratio vs. Obiter: Ratio - The proviso applies where acceptance of cash is shown to be under exceptional/unavoidable circumstances, promptly remitted to banking channels, and accompanied by tax compliance; such proof negates imposition of the statutory penalty. Observations that go beyond these concrete factors (e.g., general policy statements) are ancillary. Conclusion: The assessee satisfied the proviso by establishing immediate deposit of cash, lack of intention to evade law, and payment of tax; thus penalty was rightly deleted. Issue 3 - Use of analogous authorities on section 269SS/271D in reasoning under section 269ST/271DA Legal framework: While sections 269SS/271D and 269ST/271DA are distinct statutory provisions (the former dealing with loans/deposits/advances in immovable property transactions and the latter with specified sums), both impose restrictions on cash receipt and penal consequences for contravention with a statutory exception for reasonable cause. Precedent treatment: The Tribunal treated an earlier Tribunal ruling under section 271D/269SS as persuasive precedent because the legal question-what constitutes reasonable cause for accepting cash and when penalty may be exempted-is materially similar. Interpretation and reasoning: The Tribunal accepted the analogy: factual demonstrations of unavoidable acceptance, immediate banking, and tax compliance were held in the earlier decision to constitute reasonable cause; those same factors were present here. The Tribunal therefore followed the prior reasoning rather than distinguishing or overruling it. Ratio vs. Obiter: Treated as ratio for present case insofar as the earlier decision establishes guiding principles for interpreting 'good and sufficient reasons' in penal provisions addressing cash-receipt prohibitions; not an obiter remark in the present judgment. Conclusion: The earlier Tribunal authority was followed as persuasive precedent and supported deletion of the penalty under section 271DA in the present facts. Overall Conclusion The Tribunal concluded that the assessee proved good and sufficient reasons for the single instance of accepting cash (buyer's inability to issue cheque, custodial acceptance for safe-keeping), promptly deposited the amount into the bank the next day, and discharged tax liabilities; applying the proviso to section 271DA and following analogous Tribunal authority, the penalty was deleted. The appeal was allowed.